Prudential P.L.C. of Britain will buy American Internation Group's life insurance business in Asia. The agreement will cost Prudential $35.5 billion dollars. It will be the biggest repayment of the $!80 billion dollars the United States government used to bail out the failing A.I.G. The Federal Reserve Bank of New York, which holds the Hong Kong portion of AIG known as American International Assurance or A.I.A. will receive $16 billion dollars of the proceeds from the sale.
The purchase of A.I.A. will make Prudential the "leading life insurer in Hong Kong, Singapore, Malaysia, Indonesia, Vietnam, Thailand and the Philippines and the leading foreign life insurance business in China and India" the New York Times reports.
A.I.A. is a one hundred and sixty two year old company which is already largely funded by British Prudential's shareholdings. British Prudential has many policyholders in Asia, with 11 million people insured by the company in thirteen markets.
Chief Executive for Prudential, Tidjane Thiam, announced the buyout Monday in a conference call. Thiam said: “We are combining the two strongest international life insurers in Asia.’’ Goals of the buyout include increasing revenue, and "transformation." Thiam said "Transformational is an overused word but this deal is transformational." A.I.A. stock will not just "disappear" because of the merger though Prudential will pass its name on to A.I.A. and the company's headquarters will be located in Britain.
A.I.A. stock will still be available at the London and New York Stock Exchanges.
Prudential said that the new company would assume the name Prudential, be headquartered and incorporated in Britain, and be traded on the London Stock Exchange with American Depository Receipts traded on the New York Stock Exchange.